EPTGODDAMN my own thread makes me frustrated. Excuse me while I go slam myself head first into a brick wall.
The Goddamn Economy: A Civilized Version - Page 5
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ahrara_
Afghanistan1715 Posts
GODDAMN my own thread makes me frustrated. Excuse me while I go slam myself head first into a brick wall. | ||
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Number41
United States130 Posts
On October 01 2008 16:28 fight_or_flight wrote: kiting checks is illegal for us, but not for banks! When they do it its "inter-bank loans" or "overnight loans". It's not check kiting. It's called a sanity check. Go ask. I promise you wont be arrested for asking. | ||
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ahrara_
Afghanistan1715 Posts
wait my bad Number4 I was referrign to Luhh's post. Fuck if I can figure out wtf he's tryign to say | ||
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Number41
United States130 Posts
On October 01 2008 16:48 ahrara_ wrote: Ya, the problem is with capitalism. We should fuck this whole capitalism thing and go back to living in caves. That'll fix the problem. GODDAMN my own thread makes me frustrated. Excuse me while I go slam myself head first into a brick wall. Just relax. Everything works out eventually. I'm sure we'll be fine. No sense in messing up a brick wall.  | ||
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fight_or_flight
United States3988 Posts
On October 01 2008 16:42 ahrara_ wrote: Sorry if I'm harsh but fuck what you're saying is like me coming into a TvT strategy thread and start posting about how effective fuckign MnM is in late game I MEAN YOU'RE JUST THAT WRONG GODDAMN. Take a class on macroeconomics and study monetary theory very closely just... dude, you are WRONG. I don't know how else to put it. I'll tell you what. I won't post again until I read your entire OP. Hopefully you will read my blog (it is longer though). btw, I haven't been arguing with anything in this thread at all, only on the fundamentals. Just like a physicist asking the question "What is gravity and inertia?" while his colleagues are arguing the finer points of string theory. | ||
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Ecael
United States6703 Posts
fight_or_flight, if everyone paid off their debts, the money do not disappear. Unless people don't do anything besides paying off their debt, that can't be true, and if other things are done with money, then money is created, though not necessarily in monetary form. If people pay off their debt in the future after a purchase, there is a real increase in goods produced. The increase in products counts into the strength of the dollar and thus we can, in fact, print more cash because people borrow and money magically appears out like that. | ||
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ahrara_
Afghanistan1715 Posts
the money creation stuff are not basic examples of anythign except an untrue idea. what fight is saying is that banks arbitrarily create money, essentially printing money or counterfeiting. this is true in fucking zimbabwe where inflation is something like 10 million % (no exaggeration) but not in the u.s. money supply goes up when banks are more willing to lend, but they will only do so until they meet their capital reserve or the banks that they are borrowing from meet their capital reserve. so money is not just randomly generated. "money = debt" is a meaningless factually incorrect and stupid term Calm down, ahrara. The money creation stuff are the basic examples used to demonstrate how such (particularly the math) works, maybe you should be the one taking macroeconomics over again if you are going to complain about the example itself. (By that I mean the bank loan -> save at other bank -> further loan example) wait PLEASE tell me what exactly it is an example OF. Under what circumstance would anyone want to borrow money from a bank and put it back in right after and what purpose would that serve? I took macroecon and got an A tyverymuch | ||
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mindspike
Canada1902 Posts
http://media.gatewaync.com/wsj/pdfs/2008/09/allison.pdf | ||
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Number41
United States130 Posts
On October 01 2008 16:49 ahrara_ wrote: If I can figure out even ONE thing you're trying to say in your two posts so far I'll be ready to consider myself an accomplished scholar. wait my bad Number4 I was referrign to Luhh's post. Fuck if I can figure out wtf he's tryign to say I am not exactly sure either but it's probably along the lines that market psychology has been been in the way of rational market decisions. We want to explain it away as something tangible. From the Left: "It's Deregulation!" From the Right: "It's the low income housing initiatives!" It's people getting caught up in a fantasy imo. We keep seeing bubbles appear in the markets: The tech stock market bubble; followed by housing market bubble; more recently commodities... These bubbles arise and very savvy investors and institutions fall for them each time. Everybody is getting caught into this psychology that markets will expand infinitely. Perhaps they are caught in the elist psychology that the markets may not expand infinitely but they went to Harvard and will be able to get out near the end of the bubble because they are smater than everybody else. We need to look no further than the subprime lending: What changed that caused everybody and their sister to want to give loans to subprime borrowers. Nothing has changed in the regulatory market since 1978. Why now? Was it the same irrational exuberance Greenspan indentified in the tech bubble that spilled into housing causing bank lenders to be tards? Are our markets and the market players really that weak? I think the answer is yes. And it's scary. | ||
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ahrara_
Afghanistan1715 Posts
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Number41
United States130 Posts
But it's just weird that this cycle keeps repeating. | ||
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Ecael
United States6703 Posts
He skipped the usual middle part of "That 90 bucks Joe took a loan out for he used to buy apples from Nancy, who deposited that 90 bucks into a bank and that bank lends 81 bucks to..." etc etc, but what he was bringing up should've been obvious. At least, I thought like every macro class used that chain of loan, purchase and savings to demonstrate the math of money creation. I am pretty sure by bringing that up, he isn't saying that banks just print money themselves. The money = debt analogy is pretty screwed up though. EDIT - Why is the occurance of bubbles weird? To be fair, no one has really managed to explain why that should happen (you'd think we would learn, really). But once we've seen one that another should occur isn't too illogical. | ||
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Number41
United States130 Posts
Psychology is stronger than fundamentals it seems. | ||
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jgad
Canada899 Posts
On October 01 2008 09:59 Sp1ralArch1tect wrote: Because they let the little guy take the fall? I have no insider information or anything, or even an extensive knowledge of the world of investment banking. But I do know that the big wigs always walk away losing less than everyone else, and if they are smart they will make money off of it too. Of course they made money. That's where the trillions of dollars went. | ||
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jgad
Canada899 Posts
On October 01 2008 10:31 [X]Ken_D wrote: TL has the ban hammer watching over these threads. Excessive idiots are gone before their chaos spread. In a way, TL is self regulating itself. TL economics <3 My point was that it's not just TL, though. I post in completely uncensored forums and they are much the same. My experience across the web and over about 15 years is that TL's ban hammer is largely not necessary. Or at least I've seen other sites grow with an abundance of intelligent and rich discussion without ever having threatened anyone (other than overt spammers). Here I find the ban hammer seems to provide more of a ritualistic or cultural/social role than anything actually functional - source of stories to tell around the fire, public sacrifice/execution (sort of mayan-style), etc. But that's another topic. 0_o | ||
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jgad
Canada899 Posts
On October 01 2008 15:27 ahrara_ wrote: But you're not. An argument consists of assertion and warrant. You can't just say "booms and busts are caused by government intervention". Why the hell are they? I'm not going to even entertain the next poster who thinks they've successfully rebutted 5000 words of reasoning by posting ONE assertion. It goes back to Keynes' General Theory. He postulated the concept of an "effective demand" which was an aggregate, macro-variable to describe the total demand for goods in an economy. He further postulated that using gold as a medium of exchange was inefficient. If, for example, there was rising unemployment, he would describe this as being caused by deficient "effective demand". Not enough people were going out to buy things because they were perhaps preoccupied with uncertainties about the future and were saving more money. Less people buying means less people employed, etc. So the solution? Well, since he considered gold mining to be a completely useless endeavour, he suggested that one could use a fiat style currency in place of gold and to create jobs one could simply pay people to bury jars full of cash and then pay other people to dig it up again. This, he thought, would serve the same purpose as gold mining did in creating economic expansions of the previous eras. If only government could create money out of thin air, then they could manage unemployment by monetising their salaries. Their jobs need not be as useless as digging up or burying jars of cash, he reasoned, but any benefit they provide would be in addition to simply being recipients of money in the global effort to raise effective demand. All of the Marxists loved this at the time because they saw it as a way to institute a centrally managed economy without the problems even Marx himself acknowledged - that socialism eventually led to the need for a totalitarian state to work. The consequence of more regulation, he saw, was even more regulation - this ad nauseum until the entirety of society was under direct control of the central authority. Like trying to smash the gopher with the big mallet - he just pops up somewhere else. The problem is that Keynes never appreciated that his macro variables said nothing about the distribution of specific industries or the need for actual production, and not just employment. What happened since and until now is that central banks would inflate their way out of any perceived economic downturns. Cash is injected into the system and jobs are created via some voodoo economics. It also gave governments the power to increase spending without raising taxes - deficits could just be monetised. But the problem is always rooted in the way that the cash is injected. In the tech boom it was cheap credit following a dramatic drop in Fed interest rates (to pay for the first Gulf War) which made lots of cheap money available. People were transfixed by the ability of technology to make infinite money at the time, so the cheap money was irresponsibly invested in tech stocks. Following the invasion of Afghanistan, the Fed again crashed interest rates - this time to ONE PERCENT! This was madness, and the only difference was that this time the hot ticket items were houses (for various other regulatory reasons) and the cheap money was irresponsibly invested there. In any case, even going back to the Great Depression, the cause has been malinvestment of artificially cheap credit. Without the power to create credit with impunity or to leverage investments through fractional reserve lending or to have such risky investments protected by a central authority, the onus would be on investors to ensure that they are investing responsibly. People selling credit would be much more careful about who they lend it to. The boom-bust is driven in a lot of other ways too. Consider now that houses are seeing massive deflation, but other sectors of the economy (such as commodities) have seen massive inflation. The Fed can't deal with this - they can only work with one variable, the interest rate. But invariably in their cash injection frenzy, they ultimately end up putting cash into one sector of the economy or another. Here the cheap credit created a transient artificial demand for houses. This gave a false economic signal that there was actually a rise in demand for houses. Now lots of firms had been investing in new developments and housing expansions, only to find that the demand was artificial and to see the market collapse. Now these people are in financial trouble as well - they had nothing to do with mortgages, but their business is in ruins now because their entire sector of the economy has been severely screwed with. I could go on. Intervention by a central power necessarily created distortions in the market which will ultimately tend to naturally correct themselves. Regulations are an attempt to make permanent some of these distortions, but they invariably affect more than they are intended to. Further regulation is required to fix the second-order effects of the first regulation. More problems ensue. It's a downward spiral. I'd suggest a read of the Power and Market section of the Rothbard book I posted. It's an exhaustive treatise on the topic. | ||
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jgad
Canada899 Posts
On October 01 2008 16:30 ahrara_ wrote: INCREASING MONEY SUPPLY IS NOT PRINTING MONEY HOLY SHIT PLEASE STOP POSTING YOU ARE WRONG DEAL WITH IT "Printing money" is just a popular expression to imply "increasing the money supply". How it is done in the present, whether by technology or other exotic financial instruments is irrelevant. The point is that Banks do indeed have the power to expand the money supply, at a cost dictated by the Fed's interest rate, and with profits dictated by the investments they choose to make with that money. | ||
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jgad
Canada899 Posts
money supply goes up when banks are more willing to lend, but they will only do so until they meet their capital reserve or the banks that they are borrowing from meet their capital reserve. so money is not just randomly generated. "money = debt" is a meaningless factually incorrect and stupid term Nobody said that money was randomly generated. I think the ongoing point is that expansion of the money supply is done via banks and is limited by the Fed-set interest rate as well as reserve policies for those banks. The money supply indeed increases by a substantial amount every year. Where else, if not for from banks, do these financial instruments originate? And of course money is debt. It says right on it, in just about any country "This note entitles the bearer, on demand, to the sum of X (local currency)". It's a promise to pay by the central bank. It used to be, for example, that in the US (pre-Bretton Woods, etc), that one paper dollar was a promise to pay you an equivalent sum of gold. Now it's just a promise to pay you dollars, which is sort of cyclic, but nevertheless represent a debt. Some 96% of the money (M3) out there was originally lent out at interest to someone. That's how it comes into being. | ||
zatic
Zurich15353 Posts
Or, more bluntly: I'd rather have a worldwide economy crisis, inflation, mass unemployment and people fucking starving to death on the streets in plain sight than another Patriot Act. | ||
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jgad
Canada899 Posts
Here's a great lecture for anyone interested : Keynes and the New Economics of Fascism Some relevant economic concepts surrounding the current crisis. | ||
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